Pahud v. Court of Appeals
NEW DOCTRINEFacts
The Antecedents: Spouses Pedro San Agustin and Agatona Genil owned a parcel of land. They died intestate, survived by eight children. Eufemia, Ferdinand, and Raul, three of the children, executed a Deed of Absolute Sale of Undivided Shares conveying their respective shares to petitioners (the Pahuds) for ₱525,000.00. Eufemia also signed for four other co-heirs (Isabelita, Milagros, Minerva, and Zenaida) without apparent written authority for the latter three. The deed was not notarized. The Pahuds paid a substantial portion of the purchase price and paid off a mortgage on the property. When an extra-judicial settlement was being prepared, Virgilio, one of the co-heirs, refused to sign. Subsequently, seven co-heirs agreed to sell their shares to Virgilio for ₱700,000.00 via a Compromise Agreement in a judicial partition case, but this was not approved by the court due to the prior sale to the Pahuds. Virgilio then sold the entire property to respondents spouses Belarmino, who constructed a building on it. The Pahuds, upon learning of the construction, filed a complaint in intervention. Procedural History: The Regional Trial Court (RTC) upheld the validity of the sale to the Pahuds for 7/8 of the property, declared the sale to Virgilio and the Belarminos as invalid and inexistent, and found the Belarminos in bad faith. The Court of Appeals (CA) reversed the RTC decision, declared the sale to Virgilio and the Belarminos as valid and binding, and ruled that the Belarminos were buyers in good faith and owners of the property. The CA ordered the co-heirs to return the amount received from the Pahuds with interest. The Petition: The Pahuds filed a petition for review on certiorari, arguing that the CA erred in not applying the principle of ratification to the sale of the 4/8 portion, in holding the Belarminos as buyers in good faith despite the RTC's findings, and in giving the Belarminos superior rights over them despite prior possession.
Issue(s)
Whether the sale of the 3/8 portion of the property by Eufemia on behalf of her co-heirs, Zenaida, Milagros, and Minerva, without written authority, is valid, and whether the co-heirs are estopped from assailing the validity of the sale. Whether the sale made by the seven co-heirs to Virgilio San Agustin is valid, and if so, whether the subsequent sale made by Virgilio San Agustin of his 1/8 share to the spouses Belarmino is valid and binding. Whether the spouses Belarmino are purchasers in good faith and for value.
Ruling
The Supreme Court reversed and set aside the decision of the Court of Appeals and reinstated the decision of the Regional Trial Court with the modification that the sale made by Virgilio San Agustin to the spouses Belarmino is valid only with respect to the 1/8 portion of the subject property. The Court ordered the trial court to proceed with the partition of the property.
Ratio Decidendi
On the validity of the sale of the 3/8 portion and estoppel: The Court reiterated that Article 1874 of the Civil Code requires the authority of an agent to sell real property to be in writing, otherwise the sale is void. Thus, the sale of the 3/8 portion by Eufemia on behalf of Zenaida, Milagros, and Minerva, without written authority, was initially void. However, the Court found that these three co-heirs were estopped from assailing the validity of the sale. This was based on their continued silence and passivity, their admission of the sale in their answer to the complaint in intervention and in their Comment, and their failure to assail the transaction themselves, leaving it to their co-heir Virgilio, who was not privy to the sale. The Court applied the principle of estoppel under Article 1431 of the Civil Code, stating that their silence and passivity caused the Pahuds to believe that Eufemia was clothed with authority, making them estopped from impugning the sale. The Court emphasized that allowing them to do so would give premium to a dishonest deed. On the validity of the sale to Virgilio: The Court ruled that the subsequent sale made by the seven co-heirs to Virgilio was void because they no longer had any interest over the subject property that they could alienate at the time of the second transaction, applying the principle of nemo dat quod non habet (one cannot give what one does not have). However, the Court clarified that Virgilio could still alienate his 1/8 undivided share to the Belarminos. On the status of the Belarminos as purchasers in good faith: The Court held that the Belarminos could not claim to be purchasers in good faith. While a purchaser is generally not required to look beyond the certificate of title, this exception does not apply when the purchaser has knowledge of a defect in the title or facts sufficient to induce a reasonable person to inquire further. The Belarminos were aware that the property was registered in the names of Pedro San Agustin and Agatona Genil, not their transferor, Virgilio. They also knew that the property was subject to partition proceedings and that a compromise agreement was not approved. These facts, coupled with their construction of a building on the property, indicated that they were transferees pendente lite and bought the property at their own risk, thus negating their claim of good faith. They were deemed to have bought the property in mala fide.
Main Doctrine
While a sale of real property made without the required written authority from the co-owners is void, the co-owners may be estopped from assailing the validity of the sale due to their continued silence and passivity, especially when they have admitted the sale in subsequent pleadings or actions, thereby leading the buyer to believe that the agent was authorized.